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December 16, 2013

Introducing FRED: a Free Analysis Tool From the Fed

In last week’s posting, I began a discussion on areas of focus for my practice in 2014. As a reader service, I listed a number of free subscription sources that I use regularly to stay informed on a broad range of topics such as the economy, Social Security, tax planning and more, with hyperlinks included to make it easier for you to subscribe. In my work as an advisor, I think it's important that I access directly from the sources, and then analyze, the most important data that reflects and affects the markets and the economy. This week, we'll talk about an additional free resource that I've found very useful, courtesy of the Federal Reserve.

Introducing FRED

The Federal Reserve offers a tool as an add-in to the Microsoft Excel toolbar, named FRED, for Federal Reserve Economic Data. Although most of the data included is domestic, it does include data on several major global economies. Once downloaded, FRED will appear in the Excel toolbar as a separate tab. It would be impractical to list every item included, but I will list a few to give you an idea. The FRED data includes: GDP; federal budget (inflows and outflows); labor market data including unemployment and the labor force participation rate; U.S. population; CPI and PPI; S&P Case-Schiller housing data; prices for oil, gasoline and natural gas; stock and Treasury market data; money supply; mortgage rates, and a few currencies. As mentioned, most of the data is domestic, but there is a good bit of foreign data as well. In general, the tool contains historic data on each item in the mode in which it was released. For example, if a particular data set is released monthly, FRED will include data from all past monthly releases.

It's also very simple to use. After selecting the data you wish to analyze, you click "Get FRED Data" and it automatically loads it into the spreadsheet. The application contains a lot of automation (i.e.; macros). For example, with a click of a button you can create charts, alter the frequency and change the data from "linear" to "percent change" using various periods, and more. In addition, you can select up to three data sets per chart, but you must use the same beginning date and frequency for each.

The chart tool also has an option to include recessions shown as vertical, grey-shaded areas. In short, this is a great tool for quants as well as quant wanna-bes.